Correlation Between GraniteShares and HSBC FTSE

Can any of the company-specific risk be diversified away by investing in both GraniteShares and HSBC FTSE at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining GraniteShares and HSBC FTSE into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GraniteShares 3x Short and HSBC FTSE EPRA, you can compare the effects of market volatilities on GraniteShares and HSBC FTSE and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in GraniteShares with a short position of HSBC FTSE. Check out your portfolio center. Please also check ongoing floating volatility patterns of GraniteShares and HSBC FTSE.

Diversification Opportunities for GraniteShares and HSBC FTSE

-0.12

Correlation Coefficient

GraniteShares  HSBC FTSE

Good diversification

The 3 months correlation between GraniteShares and HSBC is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding GraniteShares 3x Short and HSBC FTSE EPRA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HSBC FTSE EPRA and GraniteShares is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on GraniteShares 3x Short are associated (or correlated) with HSBC FTSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HSBC FTSE EPRA has no effect on the direction of GraniteShares i.e., GraniteShares and HSBC FTSE go up and down completely randomly.

Pair Corralation between GraniteShares and HSBC FTSE

Assuming the 90 days trading horizon GraniteShares 3x Short is expected to generate 5.67 times more return on investment than HSBC FTSE. However, GraniteShares is 5.67 times more volatile than HSBC FTSE EPRA. It trades about 0.11 of its potential returns per unit of risk. HSBC FTSE EPRA is currently generating about -0.05 per unit of risk. If you would invest  1,680  in GraniteShares 3x Short on December 1, 2024 and sell it today you would earn a total of  488.00  from holding GraniteShares 3x Short or generate 29.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

GraniteShares 3x Short  vs.  HSBC FTSE EPRA

GraniteShares 3x Short

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in GraniteShares 3x Short are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GraniteShares unveiled solid returns over the last few months and may actually be approaching a breakup point.

HSBC FTSE EPRA

Risk-Adjusted Performance

Very Weak

Over the last 90 days HSBC FTSE EPRA has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, HSBC FTSE is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with GraniteShares and HSBC FTSE

The main advantage of trading using opposite GraniteShares and HSBC FTSE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GraniteShares position performs unexpectedly, HSBC FTSE can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in HSBC FTSE will offset losses from the drop in HSBC FTSE's long position.

The idea behind GraniteShares 3x Short and HSBC FTSE EPRA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.